Problem 15-43 Transfer Prices and Tax Regulations: Ethical Issues (LO15-4) Gage Corporation has two operating divisions in a semiautonomous organizational structure. Adama Division, located in the United States, produces a specialized electrical component that is an input to Bute Division, located in the south of England. Adams uses de capacity to produce the component, which has a domestic market price of $11. Its variable costs are per unit Gage's U.S. tax rate is 40 percent of Income In addition to the transfer price for each component received from Adarna, Bute pays a $2 per unit shipping fee. The component becomes a part of its assembled product, which costs an additional $2 to produce and sells for an equivalent of $25. Bute could purchase the component from a Manchester (England) supplier for $10 per unit. Gage's English tax rate is 60 percent of income. Assume that English tax laws permit transferring at either variable cost or market price Required: -1. What are the respective profits after tax for both the Adams Division and Bute Division of Gage if the transfer price is $4. (Round your answers to 2 decimal places) Profit after tax (Adana) Profiter tax (Blue) -2. What are the respective profits after tax for both the Adorms Division and Bute Division of Gage if the transfer price is $11. (Round your answers to 2 decimal placus.) Profit after tax (Adams) Profit after tax (B) 2-3. What transfer price is economically optimal for Gage Corporation? The transfer price economically optimal for Gage Corporation is $4 per unit The transfer price economically optimal for Gage Corporation is $11 per unit